By Mamello Matikinca-Ngwenya, Siphamandla Mkhwanazi, Thanda Sithole & Ame Muller
Growth holds up despite mounting shocks
The global economy has remained more resilient than expected, but the latest International Monetary Fund (IMF) World Economic Outlook (WEO) suggests that this resilience is becoming increasingly uneven and costly. The IMF expects global growth to slow from 3.5% in 2025 to 3.1% in 2026, before recovering to 3.4% in 2027. The 2026 forecast is marginally stronger than the 3.0% projected in the July WEO update, while the 2027 estimate is unchanged. The latest forecasts therefore point to a milder slowdown than previously feared, although growth remains below last year's pace.
The resilience partly reflects continued strong investment in artificial intelligence (AI), alongside private-sector adaptation and the use of existing buffers to absorb geopolitical disruptions. These forces have helped offset the drag from the Middle East conflict and higher energy costs. However, the benefits have been uneven. Economies connected to the AI investment and hardware supply chain have generally fared better, while energy-importing economies outside the technology value chain (like South Africa) face a more challenging outlook.
Disinflation has been interrupted
The biggest change in the outlook relates to inflation. Global headline inflation is now expected to rise to 4.7% in 2026, before moderating to 4.1% in 2027. The 2027 projection is notably higher than the 3.9% expected in July, while the 2026 forecast is unchanged. Higher energy and food prices associated with geopolitical disruptions are central to this deterioration.
This marks an important shift from the broad disinflation narrative that characterised earlier WEO publications. In October 2025, for example, the IMF expected global inflation to continue declining, albeit unevenly across economies. The latest outlook instead points to a near-term inflation setback.
For monetary authorities, this complicates the policy outlook. Renewed price pressures, particularly for economies exposed to higher energy costs, could slow the pace of monetary easing even as underlying growth conditions soften.
Risks remain skewed to the downside
Importantly, the modest improvement in the growth forecast does not signal a corresponding reduction in global risks. The IMF continues to judge risks as tilted to the downside, warning that the margins of adjustment that previously helped economies absorb shocks are narrowing.
A further escalation of geopolitical conflict could keep energy and food prices elevated, simultaneously weakening growth and raising inflation. Renewed trade tensions present an additional risk, while high public debt and rising borrowing costs leave governments with less fiscal room to respond to new shocks.
Technology presents a two-sided risk. AI investment is currently an important source of global growth, but a reassessment of expected returns could trigger financial-market corrections, undermining the key source of the recent economic resilience. Conversely, stronger AI investment and earlier-than-expected productivity gains represent an upside risk.
Resilience should not be mistaken for strength
The central message is therefore not that the global outlook has strengthened materially, but that the economy has continued to absorb substantial shocks. With the buffers supporting that resilience narrowing, its capacity to withstand the next shock may be more limited.
Week in review
Mining production (not seasonally adjusted) declined by 12.7% year-on-year (y/y) in August, following a 7.0% contraction in July. Seasonally-adjusted mining output declined by 5.4% month-on-month (m/m), down from -1.9% in July. The largest negative contributors were Platinum Group Metals (PGMs), iron ore, and coal. Overall, mining output declined by 5.2% in the three months ending in August compared to the previous three months.
Weekly Round-Up: Economics from Broader Africa
Recent developments across the region point to a mixed but gradually improving macroeconomic backdrop. Inflation dynamics remain uneven, with price pressures easing sharply in Botswana but rising in Namibia and, more modestly, Eswatini amid higher fuel costs. At the same time, improving sovereign credit assessments in Ghana and Nigeria, Zambia's new IMF staff-level agreement and Mozambique's fiscal consolidation plans signal continued efforts to strengthen macroeconomic stability and investor confidence. Infrastructure investment in Lesotho provides an additional, more localised growth impulse.
